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My client, an individual, is a shareholder in a company(alpha). The other shareholder is a company which is a subsidiary of a multi international company, I will call this the parent company, Beta.

The company is currently trading and has been trading for a long time.

The shareholding are: 45 B shares for my client, Trevor, the other shareholder, company Beta, has 55 A shares. Both A and B shares have the same rights, voting etc.

My client wants to retire and sell the shares to the other shareholder, company Beta ( he had the shares for a long time and has been a diretor, for over 10 years).

When the sale is complete, the company(Alpha) will cease trading and close. The parent company(Beta) does not wish to keep the company without Trevor,so will stop trading and close imediately after they purchase the shares from Trevor. Beta will employ someone directly to do the job, selling the products in the UK rather than operationg via this company Alpha. Alpha company was set up to sell the products of the parent company, Beta. The structure was as above with the shareholdings 45 for Trevor and 55 for parent company Beta.

On the face of it, it appers that when Trevor sells the shares to the corporate shareholder, Beta, the consideration will qualify as capital gain and ER can be claimed.

Client does not wish to go through MVL.

Are there any implications if the company will then cease to trade?

Is the company a personal company even if the other shareholder is a corporate shareholder, a company listed on the stock exchange?

yes.
They cant use a market valuation since the intention is for the company to close after the sale of shares.
The main reason for doing this is so Trevor can receive his share of retained earnings as a capital gain. The other assets are minimal.
Maybe MVL is safer? Does it matter if the company will close after he sells his shares?

I don't see any pitfalls. In theory, HMRC could try and apply either the TAAR or GAAR but provided your client can demonstrate - as clearly seems to be the case here - that there is no tax avoidance motive, all should be fine. The listed status of the other shareholder is of no relevance.

Thank you for your reply.
There is no motive for tax avoidance, but the arrangement could be seen as to minimise the tax, capital route rather than just closing the company and distribute the funds as dividends.

And (this is a guess) because there isn't much in the company to take out; it's not unreasonable for a supplier to be happy for there to be an element of "thank you" in the settlement - you just need to take some care with the tax in that case.

approx. £400k of retained earnings, no other assets just some office equipment, and hardly any creditors.
For the corporate shareholder it makes no difference whether the distribution is capital or income, so they are happy to buy Trevor out first before they close the company.

I meant the accumulated profits, and yes the other side is cash.
Why do you think ER will be challenged? because of the cash? but surely this was accumulated as a result of profits not paid out. There are no investments just a saving account .

Thank you for your replies.
I don't believe TAAR will apply even with the MVL option, as the main reason is for Trevor to get out and retire, go travelling as he said. He will not be involved in any way with any trade.
As for the GAAR, this is designed to target abusive arrangements. Not sure if this arrangement is abusive.
Admittingly, it could be seen as planning to minimise the tax liability.
To the comment by Tax Dragon, in respect of retained earnings being potentially inflated by reduction in dividend;
Dividends are normally paid in June ( year end is March), the intention is to get this arrangement done in May 2020 before June 2020. On these basis TiS may to apply.

My concern is that the other shareholder is only purchasing Trevor's shares to help him with the capital route as it makes no difference to them. Otherwise, they will just close the company and distribute the funds as income. Perhaps it is still safer to go for MVL.